Addison Wiggin – October 11, 2011
- From hope and change on the National Mall to sound and fury in 100 U.S. cities…
- Tax the rich, don’t touch Social Security and Medicare: Delusions shared by Occupy Wall Street… and the Tea Party
- Prison inmates fighting fires and other tales from a broke America
- Markets on pins and needles, awaiting a crucial vote by… the Slovak parliament
- Another big find by Odyssey Marine… and they’ll get to keep this one too
- Readers weigh in on Fort Knox gold, Singapore’s prosperity and how we stay in business…
What a difference nearly three years makes. On Inauguration Day 2009, 2 million people converged on Washington, D.C.
“Two million people don’t gather in one place unless things are really good, or really bad,” we observed that day. “We’re having trouble telling the difference these days… One thing is certain: Obama sure has a lot of hype to live up to. Guess that’s inevitable when you allow the nation to project all their fears and hopes on you.”
“I am new enough on the national political scene,” wrote the president two years after his election to the U.S. Senate, “that I serve as a blank screen on which people of vastly different political stripes project their own views.”
“As such, I am bound to disappoint some, if not all, of them.”
Well, at least he had some idea what he was getting into. But he couldn’t shake the delusion that the solution to whatever ails “the economy” lies in politics.
Thus, nearly three years later, the palpable disappointment is manifesting itself, like the now-dashed high hopes, outdoors…
The “Occupy Wall Street” crowd is marching uptown today to protest at the homes of J.P. Morgan Chase CEO Jamie Dimon and Koch Industries chief David Koch, among others.
“Objectively,” writes retired CIA station chief Haviland Smith, “the demonstrators seem broadly preoccupied with their own powerlessness. They decry the inordinate amount of power and influence held by our very rich and our corporate enterprises and the power of lobbyists to further their goals in a Congress that is essentially for sale.”
Reading this assessment, we’re struck — and we know we’re going to make people uncomfortable saying this — by the parallels between Occupy Wall Street and the Tea Party.
Both movements are born in part from outrage over the 2008-09 bank bailouts. Both feel the “American dream,” however they define it, is out of their reach. Both feel left out by a ruling class.
The Tea Party drove one long-time Republican operative to quit after 30 years as a Capitol Hill staffer. But Mike Lofgren recognized where their grievances came from.
“Historical circumstances,” he wrote last month, “produced the raw material: the deindustrialization and financialization of America since about 1970 has spawned an increasingly downscale white middle class — without job security (or even without jobs), with pensions and health benefits evaporating and with their principal asset deflating in the collapse of the housing bubble. Their fears are not imaginary; their standard of living is shrinking.”
How different is that, really, from the motives impelling the OWS protesters to the streets? For all we know, the OWS protesters are the college grads with no jobs stuck living in their Tea Party parents’ basement.
Heck, even some of the Tea Partiers might support the OWS protesters notions of “tax the rich.”
Eight out of 10 Americans support raising taxes on households earning more than $250,000 a year, according to a new Bloomberg/Washington Post poll.
That includes 81% of Democrats, 67% of independents, and 51% of Republicans.
The poll also finds 82% ruling out any cuts to Medicare, and 83% opposing any cuts to Social Security.
Presumably that would include the Tea Partiers who were insisting two years ago, “Keep your government hands off my Medicare.”
Sure gets ugly when people can no longer project their views onto the president.
Where does all this end? No one can say with absolute certainty. But the same poll says 81% of adults expect the middle class to make some sort of sacrifice to get the national debt under control.
In other words, most of the middle class has already resigned itself to getting hosed one way or another — even worse than they already have.
Unless they’re out of work. Then they join the protests. They’d have the time. The unemployment numbers are going to bear extra-close scrutiny from now on.
Protests have been reported in 100 U.S. cities. In several of those cities, police have fought the protesters. Overnight in Boston, about 100 people were arrested, some of them claiming to be U.S. military veterans. The night before, more than 30 people were arrested in Des Moines.
And even if you don’t live in a protest city, other signs of decay abound…
- Prosecutors in Shawnee County, Kan. — home to the state capital Topeka — say they’ll no longer pursue misdemeanor cases. As a result, 30 domestic violence cases have been dropped since Sept. 8
- Fire stations in Camden Co., Ga., will soon be staffed with prison inmates. They’ll be monitored by a surveillance system, and by the regular firefighters — who will have to undergo special training
- Most of the streetlights in Highland Park, Mich., have been repossessed. The electric utility has removed 1,400 lights as part of a settlement that will save the city $4 million in unpaid bills.
“After they took the streetlight from in front of my business,” says Bobby Hargrove, “someone climbed onto my roof and stole an air conditioning unit.”
Whether it’s hordes of unemployed taking to the streets, or nickel-and-dime cutbacks in the services you’ve come to expect, the crisis unfolding right now will affect you somehow. This is what happens when the mother of all financial bubbles starts to pop.
That’s why we put in the time and effort to update our summer forecast with the most recent information available… so you can make the right moves to protect yourself. We’ve just put it online… Here’s where you can check it out.
Markets are treading water today awaiting developments in, of all places, Slovakia.
Of the 17 countries that conduct business using the euro, plucky Slovakia is the only one whose parliament is yet to sign off on an expansion of the eurozone bailout fund.
One of the parties in the governing coalition refuses to go along. “The greatest threat to the euro is the bailout fund itself,” says Freedom and Solidarity Party chief Richard Sulik. “It’s an attempt to use fresh debt to solve the debt crisis. That will never work.”
“The Slovaks were historically a poor but frugal people,” says the Mises Institute’s Robert Murphy, who visited Slovakia last month, “and many of them resented bailing out the Greeks, who were spendthrifts yet had a higher standard of living.”
TIME – Until the results of the Slovakia vote come in, U.S. stock indexes are mostly flat.
The Dow remains above 11,400 after a massive run-up yesterday, driven by the delusion that the eurozone’s problems had actually been fixed.
After today’s close, the market will likely shift attention from the economy and monetary policy as earnings season gets under way. As usual, Alcoa will be first to report.
Sentiment among the nation’s small business owners is improving, but still lousy.
The monthly Optimism Index put out by the National Federation of Independent Business ticked up to 88.9 — still one of the worst readings in the last year, and far below pre-2008 levels.
Fewer small business owners say they plan to hire… which won’t do much to get those unemployed throngs off the street.
Like stocks, precious metals are holding steady. Gold is where it was around this time 24 hours ago, at $1,659. Silver is a shade below $32.
With nearly three months of 2011 remaining, the U.S. Mint has already set an annual record for Silver Eagle sales.
The total stands at 34,673,500. This is the fourth straight year of record sales.
Chalk up another big find for the folks at Odyssey Marine.
Last month, they confirmed 200 tons of silver — the largest underwater stash of metal ever — lay aboard the SS Gairsoppa, a British cargo ship sunk by the Germans in 1941.
Now they’ve gotten a positive ID on the British steamship Mantola — sunk by the Germans in 1917 off the coast of Ireland.
The silver stash won’t be as big this time — maybe 20 tons — but the work is just getting started.
As with the Gairsoppa, Odyssey has already cut a deal to keep 80% of the find, turning over the other 20% to the British government. The company has learned its lesson the hard way with the Black Swan find, as we tell in our documentary.
Reserve members will get to screen a preliminary cut Thursday night here in Baltimore. Stay tuned for updates…
“I always enjoy your irreverence. If you can’t make fun of the human race, what’s left.”
“With regard to making political comments relating to investments, one of the classical economists — John Stuart Mill or Adam Smith or the like — stated that there was no such thing as economics — there is only political economy. They didn’t even call themselves economists — they were ‘political economists’ in their own eyes. Even centuries ago, they were wise enough to understand that politics and economy are intertwined and cannot be separated.”
“Especially in these times, discussion of investments devoid of political policy considerations is virtually useless. And if profiting from gold the last 10 years is not a political policy investment call, I don’t know what is.”
“Thanks for the reality.”
“Lee Kwan Yew’s comment about Singaporeans losing the ability to speak Mandarin was noteworthy,” writes another, “Singaporeans should listen to that man. He is a genius.
“I spent a lot of time in Singapore in the ’70s and ’80s. Incredible country, the best governed country — ever.”
“Westerners scoff at their laws such as the restriction on chewing gum (people were spitting gum out in the subways cars, which jammed up subway doors, which made the trains run late, so they banned chewing gum to protect the economy). There’s an automatic death penalty for drug traffickers and rapists. White-collar crooks like Bernie Madoff get life with hard labor, plus lashes. Smash windows and loot stores like rioters like to do and you get 10 years hard labor, plus lashes. And so on.”
“But because of good governance and strict law enforcement, Singapore is the safest, cleanest, happiest, most polite, most advanced and best-to-do-business-in country in the world. (Our bleeding heart liberals would not be happy in Singapore.)”
“Taxes are low even though they have cradle-to-grave government services, free medical care and free university education. How is that possible? They have one just political party, they don’t waste money on useless things like we do in Western countries and they don’t give in to special interest groups or unions if it will hurt business or the economy.”
“Chinese officials found a gold bar in a Hong Kong vault that was tungsten wrapped in gold plate,” writes a third, continuing our thread about all the gold that is or isn’t in Fort Knox. “About the same time, a high level U.S. government official who had been in charge of Fort Knox gold records going back decades resigned and no one could find him.
“Concurrently, those Fort Knox records were not/have not been acknowledged as in existence. Presumably, the Chinese would have (quietly) wanted a trace [chain of custody] on the bar in that Hong Kong vault.”
“Seriously, the only leverage the U.S. has, apart from being a military bully — those days numbered by its people, if not the Chinese military buildup — is holding an outsized amount of gold on its soil — its own and that owned by other countries. Absent that, the changing world economic picture accelerates.”
“Of course, through lending and magic, maybe the bullion banks wrangled the gold all away, so when it really hits the fan they remain in absolute control. Without records, who is to say the banks stole it or traded it for thin air?”
“This development — the mere suggestion of little or no gold at Fort Knox in a fairly major public story — places Hugo Chavez’s request for Venezuela’s gold to be returned to it, though from London, in a whole new arena.”
“The financial world is definitely interconnected, as Dexia bank shows.”
The 5: Indeed… and you ignore that fact at your peril.
The 5 Min. Forecast
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